Do You Rate?
The continued weak economy has hit small businesses hardest, and
many have struggled to keep their credit ratings intact. But
experts say that even in a downturn, you can do simple things to
avoid bad credit.

For one, you should regularly review your credit report, a
seemingly easy task, but one many businesspeople fail to do. You
can also sell noncore assets, a move that demonstrates to lenders a
commitment to pay bills. What's more, experts say, you should
be proactive with your vendors. If vendors are not paid on time,
they might call your banker, causing your credit rating to slip.
Instead, call the vendors first, and notify them of any potential
missed payments-they might be willing to skip calling the banker.
Later, when cash flow improves, reward these vendors by paying them
early.

Finally, if at all possible, stay away from credit cards as a
means of financing your business. According to Robert D. Manning,
the author of Credit Card Nation (Basic Books), nearly 50
percent of small businesses use credit card debt to build capital,
but the cost of borrowing off credit card debt has risen sharply
over the past decade.

Wherefore Art Thou Board
Member?
Once a cushy job, serving on boards is now fraught with risks and
is more time-consuming than ever. Shareholder lawsuits are on the
rise, and directors can be held personally liable and financially
responsible for court costs as well as cash settlements and
judgments. Factor in more stringent oversight requirements that
have board members serving up to 200 hours annually, and the job
starts to seem like more trouble than it's worth.

How does a small company woo top-notch talent to its boards? A
rock-solid directors and officers (D&O) insurance policy and an
open attitude help reassure potential candidates, says Bruce E.
Beebe, editor of Directorship, a newsletter published by
executive search and management consulting firm The Directorship
Search Group in Greenwich, Connecticut.

"Today, board candidates do a lot more digging to find out
if there are hidden hazards," Beebe asserts. "They want
to show the [D&O] policy to their lawyers and to know more
about the corporate culture, the other directors and the external
auditor. So a young company can provide a copy of their D&O
policy and say 'We understand that you may want to meet our
directors, auditors or other people, and we will make that
happen.'"

While company stock and stock options can also act as a lure,
Beebe urges entrepreneurs to seek directors motivated by the
intellectual challenge of being part of a growing company-and not
by a potential windfall. "Money should not be a prime
motivator for board service," he says. "If it is, then
you have the wrong person."

20%of CFOs say the depreciating dollar is boosting
their companies' sales.SOURCE: Financial
Executives International and Duke
University